$120 Toshiba Encore Mini tablet runs Windows 8.1

Never mind the iPad mini, Toshiba’s new Encore Mini tablet competes with a refurbished iPod touch in terms of price. The 7-inch tablet retails for just $119 — and it runs Windows 8.1, not Android.

$120 doesn’t buy you a shrunken-down version of the Surface Pro, but it does get you a pretty capable little tablet that’s still able to run whatever Windows apps you throw at it. Just don’t expect to be able to load up all that many of for them to run at blistering speeds: the Encore Mini sports a quad-core Atom Z3735G processor with a maximum clock speed of around 1.8GHz, 1GB of RAM, and has a scant 16GB of internal storage.

By the time you carve out space for Windows 8.1 in that NAND, you won’t have a ton of room left, but there’s always the micro SD slot that you can use to add another 128GB. Even with just the base 16GB and the Windows penalty, there’s probably more free space on the Encore Mini 7 than there are on some low-end Android tablets — especially since 8GB is common at this price point.

You get dual cameras and 802.11b/g/n Wi-Fi and Bluetooth 4.0 in the Encore Mini, but you don’t get much in the way of ports. There’s only a micro USB 2.0 for charging and data transfer — no HDMI or Display Port here. That’s not huge negative; many tablets don’t ship with standard video outputs.

And while Office Home and Student isn’t included in this sub-10-inch Windows tablet like it was on first-gen models, Microsoft is still kicking in a free year of Office 365 Personal use. That helps underscore the real point of these entry-level Windows slates.

It’s all about driving revenue from the Windows Store, Office 365, and OneDrive. With a cleaned-up Windows Store and devices like the $120 Encore Mini on store shelves in time for Christmas, it looks like Microsoft is finally ready to challenge Android tablets and the iPad this year.